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BPO came back lower than our offer price?
Hi ladies,
Not sure if anyone has ever had this situation before, but here goes.
My husband and I are under contract for a short sale home. The seller's bank assigned a negotiator and ordered a BPO (Broker Price Opinion) for the house, and so far things are moving along at a good pace in the process. Last Friday, we get an email from the seller's realtor saying that the BPO came back 45k less than the purchase price we originally agreed to and signed a contract for, so they sent an amendment to the contract to our lawyers for us to sign, which we did. Obviously, paying less money for the house is cool and all, because it saves us money, but we are trying to figure out why they lowered the price by this much - especially considering that we already offered lower than the asking price on the listing for this house.
Naturally my husband told his parents this and they seem to think that there must be something majorly wrong with the house, but I'm really not so sure that is the case. Before we even made an offer on the house, we took a family friend who is a structural engineer to come and check it out to see if things were on the up and up - and he did not find a single thing wrong with the house - we were there for almost an hour with him. We actually hoped that he would find something wrong just so we could justify our lower offer, but he kept going on and on about how whoever did work on the house knew what they were doing and did a great job. So we waited a few days to think about it and then made our offer.
Of course we will be getting a full inspection on the house too in this whole process, so anything that maybe he did not catch will come out, but I'm just wondering if anyone else has ever had this situation or knows anyone else who has had this happen and what the reasons could possibly be for this?
This is our first time buying a home and even in all the research I did before we were looking just to make sure we were informed, I never came across this situation.....
Re: BPO came back lower than our offer price?
That's what I'm saying....I've never heard of this either! I mean, we were actually expecting that the bank would come back and say the BPO was higher than our offer price, and we would have been ok with that too, because we knew in our minds what the max would be that we would pay for the house. *fingers crossed*
That is a really interesting situation. Can your agent pull up any recent comps for you to look at? Maybe the stuff that has sold since you put in your offer has been very low (lots of other short sales and foreclosures), which has decreased the relative value of your property? Or maybe something has gone majorly wrong with the house since you last saw it? Or could there be some other future factor that is affecting its current value, like the city just announced a new highway was going to be put in next door? There are all sorts of crazy scenarios that *could* be true. Or it could just be that the person doing the BPO is clueless about the market in your area and made a bad judgement call that benefits you.
We had the reverse situation. Our BPO came in $65k more than the agreed-upon selling price and $50k more than we were willing to pay. We walked from the deal when the bank just stopped responding and promptly found the house we are about to settle on. I am so glad the bank was being ridiculous. They did us a huge favor without even knowing it.
hahaha....that is awesome for you guys then! Yea, I honestly can't imagine what could have possibly gone wrong since the last time we saw it, which was like 2 months ago. We saw the house twice too - once about 3 months before we put the actual offer in and then again with the engineer about a month or so later, then made the week after. And that was like middle of May when we signed the contract.
When the person doing the BPO pulls comps, do they pull only comps of other short sales and foreclosures, or do they factor in 'traditional sales' too? Because that might actually be the reason why the BPO came back low....the town we are buying in has about a 50/50 split between both traditional sales and short sale/foreclosures from what I've seen....we were looking at both options before deciding on this house. The house is in excellent shape compared to a lot of the others we've seen - we really could move right in. The only downside (actually, we don't care, but I know some people do) is that it is directly across the street from a school, but the bright side to that is that in the event of snow, our street would most likely be plowed first since the school is there. (I actually didn't think of that but my mother pointed that out to me)
Oh yea, and we are not working with a realtor....we are dealing with the listing agent for the house directly because our last realtor was being super shady - like showing us houses waaaaaayyyy out of our price range, even though we told her not to, then completely disregarding the houses we did want to see, including the one we are currently buying, and trying to push us to look only at her exclusive listings, half of which were out of our price range and in very poor condition compared to the house we are buying. The last straw was the 450k super exclusive new to the market listing that she just got and that we just had to see....I stopped returning her calls/texts after that. Thank goodness we did not sign any contracts with her
The person doing the BPO looks at all comps, regardless of the sale type. From what I understand (and this could be specific to each state), they have to look at houses within a 5 year age range of the home in question, they need to have similar square footage, a similar number of bedrooms and bathrooms, and similar lot size. Also, the sales should have occurred within the last 6 months, though they can stretch it out to 1 year if necessary to get enough home sales for comparison purposes.
Our short sale: 2007, 3300 square feet, 1 acre lot, 4 bedrooms, 2.5 bathrooms.
So our BPO person would have looked at houses built from 2002-2012, 2500-4000 sq feet. 1acre-7 acres (just because there is nothing smaller than a 1 acre lot in that neck of the woods), 3-6 bedrooms, 2.5-5ish bathrooms. Our issue was that is was a VERY affluent part of the county, and homes that meet these specs are all tricked out. Granite counters and custom cabinetry are considered "basic" in this area for homes built 2000 or later because they are all McMansion developments on 3 acre lots. The problem was that our short sale was the cheapest builder grade of everything. Linoleum kitchen floor, cheap laminate counters, basic oak finish cabinets, no hardwood floors, etc. Our BPO person apparently couldn't tell the difference between the two, and the bank refused to accept that the sellers tried to sell for a higher price for 3 months and didn't get a single nibble. Buyers in the market for that size of home in that part of the county want high-end move-in ready homes and are not interested in ones like our short sale, which would have required a lot of renovations and a full landscaping job to bring it up to par. Neither the BPO or the bank could understand that, and so they lost the deal. Maybe you are in a reverse situation where your house is undervalued because everything similar that has sold lately has been in worse condition and therefore worth less. If so, you may be getting a steal on your house!
I am curious to know if you have closed yet on your short sale. My husband and I are in the process as well. Our realtor just told us there is a possibility the BPO will come in below our asking price but she mentioned that GMAC might accept the lower amount from us as the purchase price. We are of course crossing our fingers but the BPO is technically not back yet. Any advice would help.
Thanks